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KPEGLO v. SCOA MOTORS


  • appeal
  • 1962-07-27
  • SUPREME COURT
  • 2 GLR 82-87
  • Print

KORSAH, C.J., SARKODEE-ADOO AND ADUMUA-BOSSMAN, JJ.S.C.


Summary

Contract?-Hire-purchase?-Misrepresentation?-Claim for rescission, return of rents paid and damages?-Plaintiff used car for one year before instituting, action.

Headnotes

The plaintiff entered into a hire-purchase agreement with the defendants in respect of a car, which was alleged to be brand-new, although on inspection the plaintiff had noticed that it was slightly worn. For a period of one year, the plaintiff ran the car an average of 2,000 miles per month over indifferent roads and was involved in five accidents. He also fell into arrears but resisted attempts by the defendants to retake possession of the car. At the end of the year, he sued the defendants in the High Court for (1) cancellation of the agreement on the grounds of fraudulent misrepresentation; (2) return of rents paid with interest thereon; (3) special, and (4) general damages.Counsel for the defendants stated that since the officer who sold the car to the plaintiff was no longer in the defendant's employ, "we are ... not in a position to dispute the allegation that he represented the car as brand-new when in fact it was not."Ollennu, J. (as he then was) held that the effect of that admission was that the plaintiff should succeed so far as his claim was for cancellation of the agreement, but added that:"In my opinion, applying the principle that the remedy of rescission ... should be accompanied by restitutio in integrum, the rents paid in the interim should be applied to the restoration of the car to its original condition."He dismissed the plaintiffs other claims. The plaintiff appealed and argued that since misrepresentation had been admitted, and the trial judge had ordered rescission of the agreement, he should also have entered judgment for the plaintiff on his second claim for return of rents paid under the agreement.

Judgement

APPEAL by the plaintiff from a judgment of Ollennu, J. (as he then was) delivered in the High Court, Accra, on the 24th January, 1961, dismissing the plaintiff's claim for return of rents paid under a hire-purchase agreement which the plaintiff wanted to rescind on the grounds of fraudulent misrepresentation. The facts are set out in the judgment of Adumua-Bossman, J.S.C.

JUDGMENT OF ADUMUA-BOSSMAN J.S.C.

This appeal is against a judgment dated the 24th January, 1961, of Ollennu, J. (as he then was) sitting in the High Court, Accra, whereby, he disallowed the claim of the plaintiff (the appellant in this appeal) to four separate reliefs claimed as having enured to him by reason of certain fraudulent misrepresentations made to him by the defendants (the respondents in the appeal) which induced him to enter into a hire-purchase agreement with them in respect of their Dodge car registered as No. AF. 1400. The learned judge at the commencement of an exhaustive and carefully considered judgment set out the reliefs claimed as follows:

"(1) cancellation of hire-purchase agreement dated the 20th January, 1959, entered into between the parties in respect of the Dodge car No. AF. 1400; (2) return of an amount of G885 ?- total sum paid on divers dates by the plaintiff to the defendants in furtherance of the hire-purchase agreement and interest thereon at five per cent. per annum; (3) G1,140 ?- special damages; and (4) G2,000 ?- general damages."

He then proceeded to set out the particulars furnished by the plaintiff of the fraudulent misrepresentations relied on as having given rise to the said reliefs, "(a) that the car was reasonably fit for the purposes for which it was required, ie. to stand the strain of long distances and [p.84] indifferent roads on which the plaintiff in his calling as a doctor with an extensive practice would have to travel; and for which the defendants had readily at hand sufficient spare-parts; and (b) that the car was a first-hand car."

He next pointed out that although in the statement of defence filed on behalf of the defendants both particulars of the misrepresentations alleged to have been made were denied, at the commencement of the trial, however, counsel for the defendants admitted the allegation as to misrepresentation that the car was first-hand when he (counsel) made the following statement:

"The officer of the company, one Mr. Moret, sales manager, who dealt with plaintiff is out of the country and is no longer in the employment of the defendants. We are therefore not in a position to dispute the allegation that he represented the car as brand-new when in fact it was not. We therefore admit the allegation that the car was represented to the plaintiff as new."

The learned judge then expressed the view that, "the consequential effect of that admission is that the plaintiff's claim for cancellation of the hire-purchase agreement of the 2nd January, 1959 (exhibit A) should succeed."' Ultimately when he came to the end of his judgment he held as follows, "In the result the plaintiff's first claim succeeds and there will be judgment for him thereon cancelling the hire-purchase agreement of the 2nd January, 1959, exhibit A."

In respect of the second, third and fourth reliefs claimed however, he held that the plaintiff's "claims for refund of the sum of G885, for G1,140 special damages, and for G2,000 general damages fail; those claims are therefore dismissed and judgment entered thereon for the defendant."

The plaintiff in appealing against the judgment has put forward the contention, in his first ground of appeal, that:

"As the defendants admitted the imputation of having induced the contract between them and the plaintiff by fraudulent misrepresentation, the learned judge in making the order for rescission of the contract as claimed in paragraph 1 of the endorsement on the writ of summons, should also have entered judgment for the plaintiff in respect of plaintiff's second claim for refund to him of the sum of G885 paid in pursuance of said contract."

As to this submission that the defendants admitted the imputation of having induced the contract of hire-purchase by fraudulent misrepresentations, it is but fair to say that the defendants do not appear to have done so. It should be observed in the first place that although it, was alleged in the writ of summons and the statement of claim that the contract was induced by fraudulent misrepresentation, nevertheless the surrounding circumstances and facts expressly pleaded in the statement of claim, e.g. that it was at any rate made clear that the car had been delivered to a customer who had run it for at least 205 miles, and the plaintiff's own account of how he inspected the car and noticed, amongst other things, that the upholstery of the front seats was slightly worn and that there were slight rattlings when he went on a short test ride, must have made it sufficiently clear to the plaintiff that the representation that the car was "a first-hand" or "brand-new" car, was not intended to be taken literally. The plaintiff's own account therefore of the surrounding circumstances as pleaded and subsequently explained in [p.85] his evidence appear to negative completely the imputation that the representation made was fraudulent, and exposed it to be no more than what Crompton J., in a case concerning the pawning of certain spoons which the pledgor described as "Elkinton's 'A' spoons," the case of R. v. Bryan,1 described as "mere praise or exaggeration, or puffing of an article to be sold." Moreover the language used by counsel for the defendants when at the commencement of the trial he said: "We are therefore not in a position to dispute the allegation that he represented the car as brand-new when in fact it was not," was obviously carefully restricted to a misrepresentation in the particular context pleaded and explained by the plaintiff himself and nothing more. It appears to me therefore that the learned judge erred in taking the view that fraudulent misrepresentation which has been described by Lord Bramwell in Derry v. Peek2 as "knowingly and fraudulently stating a material untruth which brings about wholly or partially the contract," was disclosed in the pleadings, and that counsel for the defendants admitted, not just misrepresentation simpliciter, but fraudulent misrepresentation. It follows that, in my view, the learned judge was wrong in dealing with the case on that basis, i.e., that fraudulent misrepresentation was disclosed which was expressly admitted. But even if it were the case that fraudulent misrepresentation was disclosed which was admitted, so that the learned judge was right in dealing with the case on that basis, it seems to me to be a sufficient answer to the plaintiff's contention above set out, to say that the findings of fact and the legal conclusions drawn from those findings which the learned judge advanced as his reasons for rejecting that second claim of the plaintiff's for refund of the amount of G885 afford sound and adequate legal justification for rejecting that second as well as the third and fourth claims.

When considering that second claim for refund of the total amount paid as instalments towards the hire of the vehicle under the hire-purchase agreement on the alleged ground that the contract, having been induced by fraudulent misrepresentation, was void ab initio, the learned judge said as follows:

"It was submitted by counsel for the plaintiff that the agreement having been obtained by fraudulent misrepresentation ... makes the contract void ab initio, and the amount paid in pursuance of it recoverable. I do not agree with that proposition. The law as I understand it is that a contract obtained by fraudulent misrepresentation is voidable, not void; it is valid until it is avoided, and it is voidable, at the option of the party defrauded. Dawes v. Harness (1875) L.R. 10 C.P. p. 166; Cakes v. Turquand (1867) L.R. 2 H.L. 325 at 346, 375 and 376; and see Chitty on Contract, (21st ed.) Vol. 1, p. 533, para. 1007, where the subject is fully discussed . . . Although the plaintiff was given a car which was not what it was represented to be, yet his possession and use of it was lawful ... It was open to the plaintiff to elect to repudiate the contract and return the car to the defendant-company; it was also open to him to affirm and keep the car in which case the company could give him legal title to it, and he could then sue for damages."

After pointing out as above that a contract procured by fraudulent misrepresentation is not void ab initio as contended, but only voidable at the election of the party alleging himself to have been over-reached, the learned judge went on to discuss the circumstances under which a [p.86] claim for rescission (or cancellation) can be maintained and referred to some of the cases relevant to the question including the leading case of Erlanger v. New Sombrero Phosphate Co.3 from which he cited Lord Blackburn's statement of principle and practice that:

"the practice has always been for a Court of Equity to give this relief [of rescission] whenever, by exercise of its powers, it can do what is practically just, though it cannot restore the parties precisely to the state they were in before the contract."

See also Hulton v. Hulton4 where Swinfen Eady L.J. stated that:

"The general rule is that as a condition of rescission there must be restitutio in integrum, but at the same time the Court has full power to make all just allowances."

Ollennu, J., after reference to the relevant authorities proceeded to review the material circumstances of this case, pointing out as follows:

"In this case the plaintiff has had the use of the car for a period of about one year. During that period he involved the car in no less than five accidents, some of them necessitating major repairs. From about August, 1959, he fell into arrears with the payment of his rents, and between September and November, 1959, he resisted attempts made by the defendant-company to retake possession of the car. He ran the car on an average of 2,000 miles a month, and on rough roads too. There is no evidence which connects the troubles with exhaust and ignition (about which plaintiff now complains) with the fact that the car was not a [brand] new car... In such circumstances I do not think it will be equitable or in conformity with natural justice for the plaintiff to have free use of the car; he must pay for the use on a quantum meruit basis."

The learned judge ultimately concluded as follows:

"In my opinion, applying the principle that the remedy of rescission which the plaintiff seeks in paragraph 1 of the statement of claim should be accompanied by restitutio in integrum, the rents paid in the interim should be applied to the restoration of the car to its original condition."

It seems reasonably clear, therefore, that the learned judge did not grant an unconditional order of cancellation (or rescission) of the hire-purchase agreement, as counsel for the appellant, from the form in which he framed his first ground of appeal, appears to have thought, but that he (the learned judge) made the order of cancellation or rescission conditional upon the plaintiff forfeiting the payments on account which he made towards the hire of the car, having regard to the use which in all the circumstances, he (the plaintiff) made of the car for the reasonably long period of one year during which he retained it before delivering it up to the defendants. It is a decision with which, on the undisputed facts of the case and the law properly applicable, to which the learned judge appropriately and commendably referred, it is impossible to find any fault, in so far as the plaintiff's case was based on misrepresentation that the car was brand-new when it was not.

With regard to the other misrepresentations alleged, ie., unfitness for the purpose for which the car was supplied coupled with absence of adequate spare parts to ensure prompt service on occasions when repairs became necessary ?- questions which were obviously ones of fact ?- the learned judge reviewed in detail the evidence adduced for each side [p.87] and came to the conclusion that the plaintiff's allegations have not been established but that it is rather the defendants' denials which have been established. That conclusion, I am satisfied, is amply warranted by the evidence available, including the plaintiff's own admissions.

Without doubt the substantial dispute between the parties is whether the plaintiff was offered a car represented as reasonably fit to give him service for at least a reasonable period and the car which was supplied to him turned out to be substantially useless for that purpose so that in essence he did not get anything at all like what he bargained for.

In another case which this court dealt with recently Bartholomew Co. v. Adu-Gyamfi5 the learned Chief Justice dealt with this same question in the following impressive language:

"It is again settled law that there are certain terms implied in hire-purchase agreements such as . . . (c) implied condition or warranty of fitness for the purpose for which the goods are expressly hired or for which from their character the owner must be aware they were intended to be used.

All the implied terms however are subject to the express terms of the agreement and within limits they may be excluded or modified if apt words are used provided the party relying on such exempting clause carries out his contract in its essential respect, in other words, he does not commit a breach fundamental to the terms of the contract."

On that issue therefore as to whether or not the plaintiff substantially obtained from the car the service which he bargained for, it seems to me that when regard is had to the undisputed circumstances of the instant case, to which the learned trial judge made specific reference, that for the period of a whole year the plaintiff had the use of the car running it at an average of 2,000 miles a month, it becomes obvious that the plaintiff's substantial complaint that the car was unfit for the purpose for which it was supplied, can only be described as unfounded and frivolous.

For the foregoing reasons I am of the opinion that the judgment of the learned trial judge was correct and should be affirmed.

JUDGMENT OF KORSAH C.J.

I agree.

JUDGMENT OF SARKODEE-ADOO J.S.C.

I also agree.

Decision


Plaintiff / Appellant

Ofori-Atta

Defendant / Respondent

E. N. P. Sowah

Referals

(1) R. v. Bryan (1857) 7 Cox C.C. 312

(2) Derry v. Peak (1889) 14 App.Cas. 337

(3) Erlanger v. New Sombrero Phosphate Co. (1873) 3 App.Cas. 1218, H.L.

(4) Hulton v. Hulton [1917] 1 K.B. 813, C.A.

(5) Bartholomew v. Adu-Gyamfi [1962] 2 G.L.R. 62, S.C.

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